Double Rent Deduction
10/10/1989
Query
Is a long term lease with front loaded payments followed by peppercorn rents a qualifying lease for the purpose of double rent deduction.
Decision
The original decision was overtaken by legislation which provides that a finance lease is not a qualifying lease [see for example section 345(8) Taxes Consolidation Act, 1997 and similar provisions in other property incentive schemes]. Under these sections, a lease which provides for the lessee the risks and benefits of ownership is not a qualifying lease. A lease is considered to provide in substance for the lessee the benefits associated with ownership where the lessee has the benefit of any expected increase in the value of the property. Conversely. a lease is considered to provide in substance for the lessee the risks associated with ownership where the lessee has the risk of any expected decrease in the value of the property. Revenue's view is that the lessee is exposed to this variation if the property is acquired, in substance, through the lease payments. A lease which provides for substantial payments in the first number of years and nominal or "peppercorn" rents in subsequent years is an example of a lease under which property is acquired, in substance, through lease payments. Further guidance is contained in Tax Instructions 10.1.2 and 10.1.3 as regards finance leases.
Income Tax
Section 45, Finance Act, 1986
Origin: RLS Division
File ref:IT892032
19/12/1996
Query
Whether payments for certain service charges made in accordance with the terms of a qualifying lease qualify for double rent deduction
Decision
The payments must be in the nature of rent as defined in section 96 TCA 1997. Not all payments made in accordance with the terms of a lease would be in the nature of rent. If the payment do not arise from the holding of the premises but from the use to which the premises are put they are less likely to be in the nature of rent. If the payments would arise irrespectivee of the nature of the occupier's interest in the premises, they are not in the nature of rent.
Income Tax
Section 324, Taxes Consolidation Act, 1997
Origin: RLS Division
File ref:IT962013
16/01/1998
Query
Whether payment of irrecoverable VAT under section 4 VAT Act 1972 qualifies for doublt rent deduction
Decision
No, since the payment is not rent. The deduction is not given on account of rent. If given, it is on account of the VAT payable by the lessee
Income Tax
Section 324, Taxes Consolidation Act, 1997
Origin: RLS Division
File ref:IT982001